06 Dec 5 Ways for Retailers to Improve Profit Margin
Every business aims to make a profit. And once it starts making a profit, the goal changes and is set at improving profit margins. Here are some of the ways retailers can improve profit margin.
Speed up the process
You have to cut down the turnaround time of the manufacturing process. Clients want to get products as soon as possible. So if you could send the products to the customers as the soonest possible time, you will foster loyalty. And loyal customers will rave about your company and share their great experiences with their peers. When you speed up the process, you are bound to increase your following, hence, increase your profit margin.
But it’s more than just getting customer satisfaction. When turnaround time is swift, there will be lower overhead cost. Imagine if you cut manufacturing cost from, say, five days to just three days. That means you can save on two days worth of salaries, two days worth of utilities and other manufacturing-related expenses.
This is very logical. If you want to increase profit margin, you should increase prices. However, a lot of retailers are hesitant about this for fear that they will lose their customers. You don’t really need to increase the process of all products. You can be selective about it. You can choose the most popular product with the least number of competitors. The price increase can be explained. You can always say that you need to increase the price in order to provide better service to the clients.
Keep customers loyal
You need to make a market analysis and discover retention attitude of your loyal customers. You also have to figure out when their peak purchase is. This way, you will always keep the loyal ones happy. Also, make sure you have a retention or loyalty program to keep them coming back for more. Among the popular programs is the reward system where clients who purchase more will be rewarded with more products or some discounts.
Limit the discounting
We know that clients love a good discount. But we can’t just feed into every whim of our customers. Know when to discount. Do so during special occasions like anniversary or Black Friday and other important events in the marketing calendar. Discounts are also more special when they are limited or when they are occasional.
Yes, we’ve heard so much about cost-cutting but are we actually implementing them? One of the biggest costs in manufacturing is the labor force. Do you really need each one of the employees in the company? Do a job analysis and cut the people you don’t actually need in the company. Doing so would mean saving on tax costs and benefits and overhead costs for office space. Some companies keep a handful of employees because they have important periodic tasks. In this case, just try outsourcing these few employees at a time they are needed the most. This way, you don’t need to tie yourself with overheard and other employment-related costs.